Hyundai Motor and Kia Motors will jointly invest $250 million into the world’s third-largest ride-hailing operator Grab, eyeing shared mobility services as a way to overcome faltering car sales, the companies said Wednesday. Hyundai has already injected $25 million into Grab in January, so total investment on the Singapore-based company adds up to $275 million. This is the largest investment made in a single company by the two sister automakers under Hyundai Motor Group, the group said.
Grab, which has operations in 235 cities in eight countries in Southeast Asia, is the largest ride-hailing service provider in the region, though it is smaller than China’s Didi Chuxing and U.S. company Uber, which have larger operations elsewhere.
The big bet in Grab comes as the largest auto group in Korea seeks fresh business models for growth. The group said it will make the two carmakers core players in an era where shared mobility is becoming ever more important.
The three companies will start their collaboration by deploying Hyundai and Kia-made electric cars in Grab’s Singapore business. Hyundai will first supply 200 electric vehicles to the ride-hailing company by early next year. Kia is mulling whether to follow suit soon after.
The vehicles will be rented out to Grab drivers. This way, Hyundai can introduce its electric cars to Singapore and other Southeast Asian markets once the pilot test in Singapore proves successful.
“Targeting emerging markets based on strong partnerships with local companies like Grab could be a sustainable way of making profits,” Hyundai said in statement.
If more people use ride-sharing services and other apps rather than driving their own cars, these large mobility service companies could become the major customers for carmakers in the future, and automakers are already aware of this.
The three companies will also work on developing car maintenance and repair services as well as car financing services specialized for Grab drivers using the electric cars.
Going further, they plan to launch electric car models customized for ride-hailing services.
“Grab is the best partner there is to expand [our] electric car supplies in the Southeast Asian market,” said Chi Young-cho, chief innovation officer at Hyundai Motor Group.
The latest investment is in line with Hyundai’s aggressive preparation to enter the shared mobility business. It is a relatively late mover into the future mobility business compared to competitors like Germany’s Daimler, which launched its own car-sharing brand Car2Go in 2008.
The automaker landed a partnership with Sydney-based car sharing start-up Car Next Door with the aim of launching a new app-based mobility service in Australia by 2020. It also holds partnerships with India-based car-sharing company Revv, U.S. mobility service company Migo as well as local last-mile delivery service provider Mesh Korea. In Netherlands, it started its own car-sharing business with 100 Ioniq EVs last month.